After a few more days of testimony, we might finally have resolved the issue where this whole idea of Helio becoming the newest resident of Monaco arose.

Kevin Savoree, now an executive at Andretti Green Racing, said when he handled accounting work for Castroneves in 1999 and 2000, the plan was to set up a legitimate deal in which much of the two-time Indianapolis 500 winner's income would be deferred. That meant his taxes owed to the IRS also would be deferred until he actually got the money.

"Helio Castroneves never suggested that you do something improper, right?" asked Castroneves attorney David Garvin.

"Absolutely not," Savoree replied.

But Savoree acknowledged helping draft a memo describing the ultimate goal as having Castroneves "maintain a residence in a tax haven, such as Monaco." Castroneves, a Brazilian citizen in the U.S. on a work visa, currently lives in Coral Gables, Fla., just south of Miami.

So in 1999 Helio talked about moving to Monaco. He's a citizen of Brazil, he currently resides in Florida, but 10 years ago he talked about moving to Monaco. OK then.

Yes, auto racing celebrities often move overseas to minimize their tax liability, but Helio isn't one of them. At least not yet he isn't, and last I checked you can't be tried for something you didn't do. This is like trying him for not paying taxes that aren't due until this May ... oh wait, that's also what the prosecution is doing.

Now before anyone starts exonerating Helio, remember the trial still has many weeks ahead. I've been told by one lawyer that this will probably last into May, which would effectively end Helio's season before it starts. We also have to endure more testimony regarding this concept of "constructive receipt" which determines if an individual has to pay taxes immediately or can defer them if payment is also deferred.

Helio might have an ace in the hole in this area, though, according to SI.com.

Bolstering this defense is that other drivers, including Eliot Sadler of Sprint Cup, have complained about convoluted verbiage found in racing contracts. Keep in mind, if the jury concludes that Castroneves lacked financial understanding, he would be poised to escape conviction: tax evasion requires the prosecution to prove that Castroneves willfully evaded taxes; if he was unaware that certain payments must be treated as taxable income, then he could not have committed tax evasion.

Which is great for Helio, but there's always the possibility that he is acquitted of tax evasion but convicted on charges relating to false testimony.

Lots of trial days ahead folks, but from what I can tell there's been no proverbial silver bullet yet revealed by the prosecution. But that's just one word butcher's opinion - if you see it differently please share.

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The part that confuses me is this: regardless of whether or not he WAS going to establish a residence, if the taxes are due in May, and he pays them in May, then well...don't they have to acquit? I don't understand how there's a trial before there's a crime I guess is my point.

The statement "if he was unaware that certain payments must be treated as taxable income" may be helpful for him, but shifts the burden to Miller and Katiucia. Katiucia has a business management degree and Miller is an experienced tax lawyer. That is probably one defense that won't work for them.

So far, about all that has come up in the trial is the deferred income issue. The indictment covered a number of additional charges including filing false tax returns and false testimony. Just because income isn't taxable doesn't mean it doesn't have to be reported, and the indictment claimed it wasn't even reported. That won't be hard to prove. Even a conviction on 1 count could result is serious consequences.

The next few weeks will be interesting, but it does seem odd that the defense isn't challenging what was done, just the intent.

Robert
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March 13, 2009 5:25 AM

I spoke with my CPA (seems to be that time of year) and he said on what he has read so far about this case - Helio is as guilty as anyone who owes taxes on 4/15/09....not guilty at all! You can not be guilty of not paying taxes until the tax maturity or due date has passed but they could FINE him for not properly filed documents to notify the IRS of the defered payments.I hope he is found not guilty and winds the Indy 500 this year- sweet justice!!

Excellent point, Jerry B. There are many prongs here and we're only getting started. Keep in mind it's possible to be convicted of planning to commit a crime before you actually commit it. If you have a bunch of weapons and plan to go wipe out a mall, for an extreme example, police don't have to wait until you start shooting to slap the bracelets on you. Of course than the po-lice have to prove that you had the ability to do it and were a credible threat to do it, etc., which is why we have courts here in America. If you're scheming to screw the IRS out of taxes on $5 million, and they get wind of it, they ain't gonna wait until you actually screw them. Pretty sure. Especially if you'd be unreachable, post-screwing.

Working in the employee benefits field, I don't see what Helio has done as being any different from any of the other highly compensated employees I work with. They put their money in deferred compensation accounts in order to delay the date of tax payments. This could really be considered the same as a 401(k). People put money into that account partially in order to avoid taxes during the initial reciept of the income.

This new article does a good job of explaining the situation. It seems to all come down to whether or not Helio owned the Panamanian company.http://www.miamiherald.com/460/story/950712-p2.html

Frustrated Fan
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March 18, 2009 7:56 PM

I know that tax issues confuse a lot of people, with good reason. A lot of people keep saying that what Helio did (or not - hasn't been shown yet) isn't any different than an IRA, a 401-K, etc. etc. However, the IRS is very particular, and has strict regulations, for any deferred compensation/retirement plans, and those regulations must be followed or the plan is disallowed. It isn't just where the money came from, where it's going, who owned the company, etc. If Helio's "plan" didn't follow the IRS requirements for whatever he or whomever was attempting to set up - it's disallowed. Some of those regulations affect the minimum and maximum amounts that can be deposited per year. This whole thing is not at all as simple as saying it's just like having a (pick the plan). Someone can't just decide that they want to put $5 mil in an offshore account, declare it a deferred compensation plan, and because it's offshore not comply with IRS regulations. The money was earned in the US, and therefore is covered under ALL IRS regulations. And, you can't take 3 years to decide what you're going to do with money that was payable 3 years previously. Unfortunately, it just doesn't work that way.

It really disturbs me that Helio is involved in something like this. But, I also don't appreciate being insulted with the "I'm just a racer, I have no idea about finance and taxes, etc. etc.". To be blunt about it, the IRL season is 6 months long. That leaves 6 more months to stay on top of the financial dealings and who's doing them for you every year. He had time to do DWTS. Which is more important - his financial (and freedom) future, or a TV show?

Sorry if this sounds a bit harsh, but I've just about had it with the "but I don't understand this stuff and relied on other people" defense, and not just with Helio.